You're leaving out the biggest part of the picture - which really explains things. If Apple has $80B in cash, they could leverage that by using money from the Federal reserve for the loans. So if they loan someone $100,000, to use your example, $10 K of that would come out of Apple's cash and the Fed would loan them the remaining 90%.

Depending on the size of the transaction account, the lender only needs to have 10% of the total liabilities on reserve. Now, since you are apparently severely math challenged (I'm still chuckling over your claim that $6 B is 6,000 times $100 M), if Apple were to loan out $800 B (borrowed from the Federal Reserve Interbanking Program), they only need 10% of that ($80 M) on reserve.

Not that I would expect Apple to start a bank, anyway. That's a foolish idea from the start.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

Depending on the size of the transaction account, the lender only needs to have 10% of the total liabilities on reserve. Now, since you are apparently severely math challenged (I'm still chuckling over your claim that $6 B is 6,000 times $100 M), if Apple were to loan out $800 B (borrowed from the Federal Reserve Interbanking Program), they only need 10% of that ($80 M) on reserve.

Not that I would expect Apple to start a bank, anyway. That's a foolish idea from the start.

Seeminly, the root of your problem is not understanding the difference between the books of an individual bank, and the books of the banking system as a whole. Or maybe you just don't understand the original erroneous statement.

At any rate, waving your hand at entire encyclopedia entries does nothing to demonstrate that you either understand what is written there, understand the basis of the dispute here, or understand where you are going wrong.

Confusing an individual institutuion with the system as a whole is a very common mistake, and one which is seldom addressed by the goldbug's cartoon versions of reality.

Seeminly, the root of your problem is not understanding the difference between the books of an individual bank, and the books of the banking system as a whole. Or maybe you just don't understand the original erroneous statement.

At any rate, waving your hand at entire encyclopedia entries does nothing to demonstrate that you either understand what is written there, understand the basis of the dispute here, or understand where you are going wrong.

Confusing an individual institutuion with the system as a whole is a very common mistake, and one which is seldom addressed by the goldbug's cartoon versions of reality.

And your total lack of comprehension of any financial matter is the real problem.

Sorry, but the only one who is confused is you.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

nvidia2008, I know you meant well, but your comments about banking and the Federal Reserve have badly garbled up the discussion. The Federal Reserve has a unique power in the U.S. economy in that it has the ability to regulate the money supply - in other words - to actually enable money to be created through its lending power. It can determine how quickly more money is allowed to circulate. Or it can actually hold the supply of money steady at a particular level or cause it to diminish, although as a practical matter these two events don't happen.

When I said unique, it must be realized that the Federal Reserve's power is not available to commercial banks, retail banks, companies or anyone else in the U.S. The discussion respecting Apple is simply irrelevant, and that's where nvidia2008's comments do us a disservice.

For all of us who need to either learn or renew a fundamental understanding about what money is all about, I heartily recommend the book "A Primer on Money, Banking, and Gold" by Peter Bernstein, with forward by Paul Volcker. The 2008 edition is the latest in a book that was originally published four decades ago. It is a true classic.

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Not when hedge funds expect 25 million sales. They have their own calculation and they all expect iPhone 5. It is not so much a launch delay than a crisis of faith. They still believe that Jobs is Apple. Jobs goes, Apple goes.

There is no Beatles without John, no Rolling Stones without Mick, no Oasis without Gallagher, and so on. They insist on that believe since no American companies in the last 15 years can pull it off. They don't see a reason Apple could be different.

The same thing happened when Bill Gates, Howard Schultz and Michael Dell left. Say what you want, moneymen in Connecticut still don't believe Apple can do it without Jobs. And this time, the company's founder do not come back.

They actually believe that iPhone 5 got pushed off the schedule because Jobs wasn't there to crack the whip and order the finalizing of design and software. 4S is therefore to buy time until internal succession war is over. What would I tell stockbrokers to make them believe it is not so?

Not when hedge funds expect 25 million sales. They have their own calculation and they all expect iPhone 5. It is not so much a launch delay than a crisis of faith. They still believe that Jobs is Apple. Jobs goes, Apple goes.

There is no Beatles without John, no Rolling Stones without Mick, no Oasis without Gallagher, and so on. They insist on that believe since no American companies in the last 15 years can pull it off. They don't see a reason Apple could be different.

The same thing happened when Bill Gates, Howard Schultz and Michael Dell left. Say what you want, moneymen in Connecticut still don't believe Apple can do it without Jobs. And this time, the company's founder do not come back.

They actually believe that iPhone 5 got pushed off the schedule because Jobs wasn't there to crack the whip and order the finalizing of design and software. 4S is therefore to buy time until internal succession war is over. What would I tell stockbrokers to make them believe it is not so?

This is, of course, all nonsense.

First, there is no internal succession war. Everyone knows who is in charge.

Second, Jobs was there for the 4S development. Not as CEO, but he was involved on a nearly daily basis and continued as Chairman.

Third, there is a very solid management team in place which ran the company before and is doing just fine. They did exceed their profit and sales guidance by a nice margin.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

I'll be taking this to a new thread shortly as it is an important topic and explain more there.

Quote:

Originally Posted by jragosta

Depending on the size of the transaction account, the lender only needs to have 10% of the total liabilities on reserve. Now, since you are apparently severely math challenged (I'm still chuckling over your claim that $6 B is 6,000 times $100 M), if Apple were to loan out $800 B (borrowed from the Federal Reserve Interbanking Program), they only need 10% of that ($80 M) on reserve.

Not that I would expect Apple to start a bank, anyway. That's a foolish idea from the start.

Again, yeah, we're on the right page but I think the Fed does not need to get involved except from the "seeding" of credit. Let's go to the new thread. Apple does not need to start a bank, the point I'm trying to make is that it is virtually its own bank now. This is one of Steve's greatest achievements that might not be recognised by many even for a long time to come.

Quote:

Originally Posted by Kibitzer

nvidia2008, I know you meant well, but your comments about banking and the Federal Reserve have badly garbled up the discussion. The Federal Reserve has a unique power in the U.S. economy in that it has the ability to regulate the money supply - in other words - to actually enable money to be created through its lending power. It can determine how quickly more money is allowed to circulate. Or it can actually hold the supply of money steady at a particular level or cause it to diminish, although as a practical matter these two events don't happen.

When I said unique, it must be realized that the Federal Reserve's power is not available to commercial banks, retail banks, companies or anyone else in the U.S. The discussion respecting Apple is simply irrelevant, and that's where nvidia2008's comments do us a disservice.

For all of us who need to either learn or renew a fundamental understanding about what money is all about, I heartily recommend the book "A Primer on Money, Banking, and Gold" by Peter Bernstein, with forward by Paul Volcker. The 2008 edition is the latest in a book that was originally published four decades ago. It is a true classic.

I think you're off base a little bit as well. Let's take this to a new thread on Political Outsider and thrash it out there. I'll post the link to the new thread soon. Your input would be much appreciated.

In the context of this thread, the point I was trying to make is that Apple's earnings being "analysed" by Wall Street is best illustrated by an old Malay proverb ~ "You can see a germ across the river, but not the elephant in front of you"

Apologies if I derailed this thread, my assertion was simply that Apple with $80 in cash reserves it can become a large financial institution in and of itself.

Yes, blatant activism on my part but I wanted to highlight the complete failure of the US and global financial system whereby Apple as the best performing (by all kinds of metrics) company in the history of modern enterprise can "disappoint"... Who is it disappointing? Only those that want to destroy the value of our lives... monetary and otherwise. Yes, I understand "disappoint" should not be taken out of context as it is a common financial analysis term.

1. With $80 billion in reserves, hypothetically, Apple can be an $800 billion bank
2. Wall Street and the Banking System is the biggest scam in our lifetime
3. Juxtaposition of the above two points can be used to help us understand Fractional Reserve and it's insidious nature